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Energy minister delivers warning to party conservatives and resources sector ahead of Finkel review, which is expected to recommend implementing a low emissions target.

Josh Frydenberg: ‘I think everyone recognises that if you do nothing, power prices do go up.’

The energy minister, Josh Frydenberg, has warned internal and external critics that the Turnbull government’s policy has to change, because doing nothing will drive up power prices – as Australia’s resources sector fired the first public warning shot against a new low emissions target.

With the Finkel review expected on Friday to recommend the Turnbull government consider implementing a low emissions target (LET) to deliver a concrete signal to the market to drive new investment in power generation, Frydenberg on Monday delivered a blunt public warning that the status quo was not an option.

“I think everyone recognises that if you do nothing, power prices do go up,” Frydenberg said. “We do need a technology-neutral approach and we do need to ensure that the transition to a lower-emissions future is stable and ensures that power prices are affordable.”

Government conservatives are already flexing their muscle ahead of the report flagging energy policy reforms to the Council of Australian Governments on Friday by Alan Finkel, the chief scientist. Compounding the government’s current difficulties, the Minerals Council of Australia has signalled it will oppose a new regulation that would “deliberately cast aside coal from the energy mix”.

A number of Coalition MPs would resist a new LET that was set at a level to exclude high-efficiency low-emissions coal plants.

The Minerals Council’s executive director for coal, Greg Evans, said on Monday a government energy plan “that strays away from coal generation or deliberately excludes its contribution in the future means higher prices and less reliable electricity for everyday Australians, industry and businesses”.

“These options need to be part of our future energy mix and should be supported and guided by sensible government policymaking.”

But the Business Council of Australia lined up in support of Frydenberg’s arguments – although the peak business group warned the government to consult carefully with stakeholders before moving ahead.

“A properly constructed LET, designed in consultation with industry and customers, could be an effective solution to deliver secure, reliable and affordable electricity while also assisting us to meet our emission reduction targets,” she said.

Labor supports an emissions intensity trading scheme for the electricity sector, rather than a LET, but on Monday Labor’s climate change spokesman, Mark Butler, said the opposition would keep “an open mind” ahead of the release of the Finkel report.

Butler said he objected to the fact the government, by ruling out any form of carbon trading, was “forcing the country to have a debate about a second or even third best option”.

But he said Labor would watch and wait. “We’re going to keep an open mind before we see the report.”

A key Senate powerbroker, Nick Xenophon, also prefers an emissions trading scheme to a LET.

Xenophon said on Monday if there was a genuine contest between a LET and an emissions-intensity trading scheme, then the trading scheme would win, because it had been subjected to rigorous analysis, and was supported by most of the business community.

But he said he would attempt to keep an open mind ahead of Finkel. “I want to see what the chief scientist says, and that’s really what we have to wait for.”

The prime minister, Malcolm Turnbull, told reporters the government’s energy policy would be “driven by economics and engineering – not ideology which is Labor’s mistake”.

Turnbull said in the energy policy space the government had already taken tough decisions. “I had to make some tough decisions about limiting the exports of gas from the east coast to ensure the domestic market was fully supplied.